India's Diesel Market Loses Momentum As Demand Growth Weakens

Kpler said that diesel demand is expected to grow by 2.2 per cent over the year, while growth pace in 2025 is anticipated to be 2.5 per cent

The preliminary oil ministry data showed that the fuel sales stood flat at 7.64 million tonne in October in comparison to the same period a year earlier.

Source : PTI

India’s diesel market is losing momentum as the speed for growth in demand eased. This slowdown in demand was attributed to a weaker pace of the economy and a shift in consumption patterns.

A report by Bloomberg revealed that in the first 10 months of 2024, volume of diesel sales climbed by 1.8 per cent. This was the slowest pace seen in the industry since the pandemic lockdowns of 2020. The preliminary oil ministry data showed that the fuel sales stood flat at 7.64 million tonne in October in comparison to the same period a year earlier.

Today, diesel accounts for nearly four barrels in every 10 of oil used in India. Even in China and Europe, buying has started to become weak. R Ramachandran, former director of refineries, Bharat Petroleum Corp, said, “The consumption of goods in smaller towns and cities of India has not picked up at the pace that was expected. This has in all likelihood impacted the movement of trucks that transport goods, hurting diesel demand. Also, rains this year got extended, further adding to pressure on diesel sales for farm sector.”

Kpler said that diesel demand is expected to grow by 2.2 per cent over the year, while growth pace in 2025 is anticipated to be 2.5 per cent. Esteban Moreno Cots, senior demand analyst, Kpler, explained, “India’s oil-demand profile is evolving, with a noticeable shift from diesel to gasoline. This transition is supported by rising consumer spending, and an expanding middle class. We observe a moderation in the growth rate compared to the post-pandemic recovery.”

Notably, China is the largest oil importer in the world. Diesel demand in the country has been contracting due to the spread of trucks powered by liquified natural gas, and the property crisis which has been plaguing the economy.